Best Mortgage Rates in Canada

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Canada Mortgage Rates - Frequently Asked Questions

Content last updated: April 22, 2020

If you need any help comparing mortgage rates, these frequently asked questions may be able to help you.

Why should I compare mortgage rates?

Not all mortgage rates are created equal. The terms and conditions of mortgages can vary, as can the mortgage rate itself. Each mortgage caters to an individual's particular needs. If you want to find the best mortgage for you, you need to compare all of your options.

How much can I save by comparing mortgage rates in Canada?

A mortgage is a major financial investment - probably the biggest you’ll ever make. Small differences in your mortgage rate can result in a difference of thousands of dollars over the course of just a 5-year term. In order to save money and get the best deal you can, you should compare mortgage rates from multiple lenders when you first get your mortgage, and whenever you renew your mortgage.

Should I get an open or closed mortgage?

It depends. Closed mortgages are more popular as they have lower rates, but open mortgages have extra flexibility that you might need. Here’s more information on the differences between open and closed mortgages:

Closed mortgages have lower rates, compared to open mortgages. Closed mortgages can come in fixed and variable form, but place restrictions on the amount of principal you can pay down each year. If you pay off the entire principal in a closed mortgage before the set term, you will face a prepayment penalty, which is normally a 3-month interest charge.

Open mortgages allow you to pay off your entire mortgage balance at any time throughout the term. The drawback is that you pay a premium for that option, through higher rates. People opt for open mortgages if they are planning to move in the near future, or if they are expecting a lump sum of money through an inheritance or bonus, which would allow them to pay more off their mortgage.

What is the difference between a variable vs. fixed mortgage rate?

The difference between fixed and variable mortgage rates is in whether they can change over time. Fixed rates will stay the same over the course of your mortgage term (usually 5 years), while variable rates will change alongside changes in your lender’s prime rate.

Fixed mortgage rates are more popular, with 74% of all mortgages in Canada using fixed rates in 2016 (Source: Statistics Canada). The benefit of a fixed mortgage is that you are protected against interest rate fluctuations, so your regular payments stay constant over the duration of your term.

Variable mortgage rates are typically lower than fixed rates, but can vary over the duration of the term. Variable mortgages are prone to market behaviour (via the prime rate) which affects your payments. That means your payment amounts can change over time. While variable rates are generally lower, they are riskier than fixed rates.

How often are Ratehub.ca mortgage rates updated?

The mortgage rates you see on Ratehub.ca are updated every few minutes. Our mortgage rates are sourced through two methods: Mortgage brokers can log into our platform and update their rates instantaneously; and we source rates from Canadian bank websites to ensure the rates are current.

What are prepayment options?

Prepayment options outline the flexibility you have to increase your monthly mortgage payments, or pay down your mortgage principal as a whole. The monthly prepayment option is a percentage increase allowance on your original monthly mortgage payment.

For example, if your monthly mortgage payment is $1,000 and your prepayment allowance is 25%, then you can increase your monthly payments up to $1,250. The lump sum prepayment option on the other hand, applies to the original mortgage amount. So, if your lump sum prepayment allowance is 25% on a $100,000 mortgage amount, then you can pay $25,000 off the principal every year.

What is the mortgage ratehold?

The rate hold clause refers to how long before your mortgage renewal date you can lock in the prevailing mortgage rate, should that interest rate be a favourable one. The renewal date is the date on which the term of mortgage expires, not to be confused with the amortization period. So, for example, if you have a 5-year term on your mortgage, and a 90-day rate hold, then within 90 days before the expiration of the term, you have the option to lock in the current mortgage rate.

Should I work with a bank or a mortgage broker?

There are advantages to getting a mortgage directly from a lender as well as getting a mortgage through a broker. While going directly to your current bank lets you consolidate your financial products, using a broker allows you to shop around quickly and easily, at no cost to you.

Luckily, you don’t need to choose one of the other. You can speak to multiple banks and multiple mortgage brokers, if you want to. Ratehub.ca is a great place to start, as we compare the best mortgage rates in Canada from multiple lenders and mortgage brokers. Once you’ve compared your options, we can put you in contact with your chosen provider. Click here to get started.

What is the mortgage ratehold?

The rate hold clause refers to how long before your mortgage renewal date you can lock in the prevailing mortgage rate, should that interest rate be a favourable one. The renewal date is the date on which the term of mortgage expires, not to be confused with the amortization period. So, for example, if you have a 5-year term on your mortgage, and a 90-day rate hold, then within 90 days before the expiration of the term, you have the option to lock in the current mortgage rate.